The Long View: Phil Muller on Navigating Medicare Podcast Episode Released: October 22, 2024 | Hosts: Christine Benz & Amy Arnott | Guest: Phil Muller

Introduction and Guest Background

In the October 22, 2024 episode of The Long View, hosted by Christine Benz and Amy Arnott from Morningstar, the spotlight shines on Phil Muller. Phil is renowned for his expertise in Medicare and Social Security, primarily through his Get What's Yours series of consumer guidebooks. His latest work focuses on Medicare, titled Get What's Yours for Medicare: Maintenance, Maximize Your Coverage, Minimize Your Costs. Phil's extensive background includes writing for prominent publications such as PBS NewsHour, Money magazine, and U.S. News & World Report. His career spans roles as a newspaper business reporter, editor, founder of the Insure.com consumer website, and a communications executive in the insurance industry.

Impact of Phil’s Social Security Book

Christine Benz opens the conversation by delving into Phil's previous work on Social Security. Phil discusses how his book, co-authored with Lawrence Kotlikoff and Paul Salman, exposed loopholes that allowed higher-income seniors to maximize their Social Security benefits disproportionately.

Phil Muller [02:35]: "Higher income people get a disproportionate benefit from every technique... our pushback was that we didn't disagree with that, but we thought people of moderate means were also getting a legitimate benefit from this claiming device."

Bloomberg confirmed that Phil's insights led to legislative changes, specifically prohibiting the "file and suspend" strategy, which had allowed individuals to significantly increase their spousal benefits. Despite efforts to advocate for the inclusion of moderate-income beneficiaries, Congress opted to restrict this provision, highlighting the challenges in balancing benefit equity.

Complexity of Medicare and Social Security

Amy Arnott inquires about the perceived complexity of Medicare compared to Social Security. Phil acknowledges that while both programs have their intricacies, Medicare's complexity is often overstated.

Phil Muller [06:05]: "These programs can be clearly explained in a way that lets people make informed decisions... it's not impossible to do."

He criticizes the media and private insurers for perpetuating the complexity, arguing that with the right guidance—such as his book—individuals can navigate Medicare effectively.

Medicare Financing: How It’s Funded

Christine steers the conversation toward the financial underpinnings of Medicare. Phil elucidates the various funding mechanisms:

1. Payroll Taxes (Part A): Covers hospital, hospice, and some nursing home expenses. Funded through a dedicated trust fund, which often requires government supplementation to prevent depletion.

2. Medicare Premiums (Part B): Most beneficiaries pay a basic premium that covers approximately 25% of Part B costs. The remaining 75% is funded by general revenues, a fact many consumers are unaware of.

3. Subsidies for Higher-Income Earners: About 8% of higher earners face a Part B surcharge.

4. Additional Subsidies: Medicare Part D and Medicare Advantage plans receive significant subsidies, adding to the financial strain on general revenues.

Phil Muller [08:06]: "Most people only pay for 25% of their Part B. I don't think people know this at all."

Phil emphasizes the lack of consumer awareness regarding Medicare's true cost, noting that most believe they are fully funding their Medicare through premiums alone.

Understanding Medicare Parts A, B, C, D

To demystify Medicare, Phil breaks down its components:

• Part A: Hospital and inpatient services, including hospice.

• Part B: Outpatient services, medical equipment, and certain prescription drugs administered in facilities.

• Part C (Medicare Advantage): An alternative to traditional Medicare, offering additional benefits like dental, vision, and hearing, but often with network restrictions and prior authorization requirements.

• Part D: Prescription drug coverage, excluding over-the-counter medications.

He highlights that while Medicare Advantage plans are cheaper and offer supplemental benefits, they come with managed care limitations, such as restricted provider networks and potential denial of care through prior authorizations.

Traditional Medicare vs. Medicare Advantage

Phil contrasts Traditional Medicare with Medicare Advantage, outlining the pros and cons of each:

• Traditional Medicare + Medigap:

  • Pros:

    • Flexibility to choose any Medicare-accepting provider nationwide.
    • Comprehensive coverage with Medigap plans, particularly the letter G plan, which covers nearly all out-of-pocket expenses.

  • Cons:

    • Higher premiums due to Medigap.
    • Potentially complex for those with minimal healthcare needs.

• Medicare Advantage (Part C):

  • Pros:

    • Lower premiums.
    • Additional benefits such as dental, vision, and hearing.

  • Cons:

    • Limited provider networks.
    • Prior authorization requirements can lead to denied care requests.
    • Potential for increased out-of-pocket costs if out-of-network care is needed.

Phil Muller [22:08]: "Having a Medigap plan is like having a de-stressor; medical expenses become the wild card in later life finances."

As of the episode, Medicare Advantage plans account for 54% of Medicare beneficiary enrollment, driven largely by their affordability and additional benefits. However, policymakers criticize these plans for not incorporating cost-control measures inherent in Traditional Medicare.

Enrollment Process and Deadlines

Phil provides a detailed overview of the Medicare enrollment process, emphasizing the importance of timely registration to avoid penalties and coverage gaps:

1. Initial Enrollment:

   • Automatic Part A Enrollment: For those transitioning from employer insurance upon turning 65.
   • Sign-Up for Part B: An eight-month window is provided to enroll in Part B when leaving employer coverage.
   • Subsequent Enrollment: Additional periods to sign up for Part D and Medigap.

2. Late Enrollment Penalties:

   • Part B: 10% increase in premiums for each 12-month period of delay.
   • Part D: 1% increase in premiums per month of delay, totaling 12% per year.

Phil Muller [26:20]: "The day you step off a curb and break your ankle is the day when you don't have insurance. That's when these things happen."

He warns against relying solely on COBRA continuation coverage, as it may not serve as primary insurance under Medicare, leading to unexpected coverage issues.

Medigap Plans: Choosing the Right One

Phil discusses the nuances of Medigap supplemental plans, particularly the letter G plan, which offers comprehensive coverage by filling the gaps left by Traditional Medicare. He advises beneficiaries to focus on premium variations rather than coverage differences, as all letter G plans provide the same core benefits.

Phil Muller [44:18]: "The key thing about Medicare supplement plans is that there are 10 different letter plans. So say you have a letter G plan... the only variable to really shop on is their premium."

He encourages consumers to utilize Medicare's online tools and compare premiums across providers to find the most cost-effective option without sacrificing coverage.

Role of Private Insurance Brokers

Addressing the influence of private insurance brokers, Phil acknowledges their expertise but cautions about potential conflicts of interest due to commission-based incentives.

Phil Muller [39:05]: "Brokers tend to migrate towards insurance plans that pay them the best commission... your broker may not be telling you about all the products on the market that you might want to consider."

He recommends that consumers use brokers as one of several resources, supplemented by independent research to ensure an unbiased selection of Medicare plans.

Resources for Medicare Information

Phil provides a comprehensive list of resources for those navigating Medicare:

1. Medicare Plan Finder: An online tool for comparing Part D and Medigap plans based on location.

2. Annual Publications:

   • Medicare and You: Details changes and updates every year.
   • Medigap Annual Explainer: Clarifies Medigap provisions and regulations.

3. Kaiser Family Foundation (KFF): Offers factual assessments and analyses of Medicare policies and cost structures.

Phil Muller [50:06]: "The Medicare Plan Finder applies to Part D and Medigap plans, allowing you to do a fairly good apples to apples comparison."

Conclusion

Phil Muller emphasizes the importance of proactive engagement with Medicare to optimize benefits and minimize costs. He advocates for informed decision-making, leveraging available resources, and understanding the financial implications of Medicare choices.

Phil Muller [53:12]: "Making informed decisions based on good information... that's what you need to do."

Christine Benz and Amy Arnott wrap up the episode by thanking Phil for his insights and encouraging listeners to utilize the recommended resources to navigate their Medicare options effectively.

Notable Quotes with Timestamps

• Phil Muller [06:05]: "These programs can be clearly explained in a way that lets people make informed decisions."

• Phil Muller [08:06]: "Most people only pay for 25% of their Part B. I don't think people know this at all."

• Phil Muller [26:20]: "The day you step off a curb and break your ankle is the day when you don't have insurance."

• Phil Muller [39:05]: "Brokers tend to migrate towards insurance plans that pay them the best commission."

• Phil Muller [44:18]: "The key thing about Medicare supplement plans is that there are 10 different letter plans."

Key Takeaways

1. Understand Medicare's Funding: Awareness of how Medicare is financed is crucial for informed decision-making and recognizing the program's true cost to taxpayers.

2. Evaluate Plan Options: Weigh the benefits and limitations of Traditional Medicare with Medigap versus Medicare Advantage based on personal healthcare needs and financial situations.

3. Timely Enrollment: Avoid penalties and coverage gaps by enrolling in Medicare during designated periods without undue delays.

4. Utilize Resources: Leverage online tools, annual publications, and reputable organizations like KFF to navigate Medicare effectively.

5. Be Cautious with Brokers: While brokers can provide valuable assistance, supplement their advice with independent research to ensure unbiased plan selection.

Phil Muller's insights serve as a roadmap for listeners to navigate the complexities of Medicare, emphasizing the importance of proactive engagement, informed choices, and utilizing available resources to secure optimal healthcare coverage in retirement.